INFORMAL CHARGES

Paying informal charges to government officials for service or privileges adds to the costs of running a business. If the amount of informal charges is unpredictable, or the bribery efficiency is less than perfect, it will increase operational risk and thereby diminish the interest of investors and slow the rate of foreign direct investment. Thus, public sector corruption is recognized as both an impediment to doing business and a major obstacle of economic development. When public sector corruption is endemic, it undermines the rule of law, property rights, and enforcement of contracts, thus eroding fundamental institutions of free markets. Politically, rampant public sector corruption discredits the ruling government and may lead to widespread public frustration and upheaval.

The Informal Charges Sub-index aims to measure the prevalence of paying informal charges for firm level operations as well as of the fairness of the government procurement process.

The higher overall index score along with the individual scores for sub-indices always refer to a better performance within the context of the BEI.

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Credits:

The Malaysia Business Environment Index (2012) is the result of the collaborative efforts of many individuals. The authors of the report were Dr. Jane Terpstra Tong (Monash University Sunway Campus), Nina Merchant-Vega (The Asia Foundation) and Dr. Robert Terpstra (Monash University Sunway Campus). Expert technical advice was provided by Dr. Edmund Malesky (University of California, San Diego). Valuable comments and support were provided by Anthea Mulakala, Reid Hamel, Herizal Hazri, Dr. Yeah Kim Leng, Kristina Fong, Jason Fong, and Munsifah Abdul Latiff. Research assistance was provided by Koh Jen Li, Peg-Gy, and Collin Gerst.

The survey data visualization project "Business Environment Index: Malaysia" was led by John Karr, Director for Digital Media at The Asia Foundation. Steve Ubiera, Production and Systems Administrator for The Asia Foundation served as the project manager and data visualization designer. Site development was conducted by William Wang and Johan Baversjo.